Report: Florida's Banks and TARP

Take It or Leave It?: Time will tell which banks made the right choice in seeking TARP funds -- or avoiding them.

Businesses say banks aren’t lending. Banks say they’re lending but that loan demand is down. It turns out they’re both right. Banks haven’t ceased lending, but they have tightened standards on who qualifies for loans.

In the commercial real estate area alone, banks have been tightening credit standards every quarter going back more than three years, according to the Federal Reserve Board’s April survey of bank senior lending officers. In overall business lending, the Fed reports a “very elevated” percentage of lenders continuing to tighten credit.

Owners of businesses with less than $50 million in annual sales, the vast majority of Florida businesses, have seen tightening credit standards since January 2007. The credit
is more expensive, and more collateral is required.

But the banks also report weakening loan demand.
In the commercial real estate loan segment, for example,
the percentage of domestic banks reporting weaker
demand is the highest since 1995, when the segment
was first surveyed.